Despite it all, the lines in New York and San Francisco--numbering several hundred strong--were well-behaved and patient as they inched along the sidewalk, although CNET's Josh Lowensohn reported that a fight broke out at an AT&T store in Emeryville, Calif. After all, most of these people are Apple's biggest fans, and were standing in line not just because they loved the product, but for the camaraderie of their fellow geeks.

But a large part of Apple's marketing strategy depends on these early adopters spreading the gospel to their friends and family about the wonderful products and services offered by Apple. No one is complaining about the product, but the service left a lot to be desired, and some of Apple's best customers left its stores fuming this morning after their experience.

Apple employees mill about as they wait for the iTunes servers to come back online.
Tom Krazit/CNET News.com

Time out So, what exactly happened? The issue appeared to involve the huge stress placed on the iTunes infrastructure as countries around the world attempted to activate new iPhones or upgrade old iPhones.

The problems multiplied as people in the U.S. woke up and began purchasing their iPhone 3Gs and downloading the iPhone 2.0 software. The process was slow, but moving in New York as the launch got under way. However, there were early signs that things were just as bad in the U.S. as they were in the U.K.: the first person to emerge with an iPhone 3G at the Fifth Avenue Apple store in New York was actually 75th in line to start the day.

By the time San Francisco hit the 8 a.m. hour, the launch process had ground to a halt. The first customers let into the downtown San Francisco Apple store were initially told that AT&T's activation process had failed for about 30 minutes between 8 and 8:30 a.m. PDT, which AT&T later denied, pointing the finger squarely at Apple.

"To the best of my knowledge AT&&T servers did not crash," said Mark Siegel, an AT&T spokesman. "The issue was that when customers got to the last step in the activation process, which was to sync the phone with iTunes, the Apple servers were so overwhelmed that we couldn't complete the last step in the process in the stores. "So we started telling customers to go home and try syncing their iPhones from home."

Apple store employees acknowledged that iTunes was the main source of the problems: "This is really frustrating," said one employee inside the Apple store, as she tried to activate an iPhone over and over. Apple did not respond to multiple requests for comment on what exactly happened to the iTunes infrastructure, and an Apple public relations representative outside the San Francisco store did not answer repeated questions about what was causing the delay.

Damage control
Apple quickly started to try and make amends. Dale Larson, the first person in line in San Francisco, was given a free 16GB iPhone 3G after he waited two and a half hours (which, to be fair, was caused in part by the San Francisco police asking him to move his tent) for his iPhone 3G to activate. He said Apple store employees spent two hours on the phone with executives at Apple headquarters in Cupertino trying to figure out what to do.

Some customers were sent e-mails from the company, which one Crave reader reproduced in our comments. "Due to network congestion on the iTunes server, you may not be able to update or restore the software on your iPhone. Once the congestion has decreased the software should be available for you to update. It would be advisable to attempt the update later on today."

Apple found itself fending off sharp criticism from bloggers and fans normally in love with the company. Gizmodo won headline of the day contest with "It's the iPocalypse," while others on the Web and through microblogging sites like Twitter and FriendFeed vented their frustration for the world to see.

On CNET, decameron9 left this comment: "Server crashes, bandwidth problems...acceptable if this was a sudden, unforeseeable demand on resources. Not in this case - or in any case with a product launch. I doubt Jobs just woke up this morning and announced the 3G or (the) 2,0 upgrade....it's been in the works for months."

A long line stretches away from the Apple store at 11 a.m., three hours after the doors first opened.
Tom Krazit/CNET News.com

FalloutApple has made a fortune over the past several years with a two-pronged approach to consumer technology. First, make a product that's easy to use and understand. Second, make that product into a phenomenon--a status symbol that evokes an elevated level of technology sophistication and class--through clever marketing and superior customer service.

A large part of that second step has involved meticulously planned and perfectly executed events that make people feel like they are experiencing history, not just a product launch. Last year's iPhone launch event was perhaps the pinnacle of that strategy, as several million people came to a virtual standstill on June 29, 2007, to watch a company launch a phone. Unfortunately for Apple, several million people came to a standstill again this year: in line waiting for the iPhone 3G, or at home trying to activate their original iPhone.

On Friday, Apple lost some of the luster that has adorned its star since the iPod turned into an icon. It will always have a dedicated group of supporters who believe in what the company is trying to do, and who have been with Apple through thick and thin. Most people, however, are much more fickle. And after today, they'll think twice before waiting for hours to be the first one to snap up an Apple product.

That doesn't at all suggest that the company's long-term prospects are diminished: sales of the Mac, iPod, and iPhone will continue to grow, especially among the younger demographic. And Apple's servers had already started to recover by Friday afternoon, meaning that iPhone sales should proceed once the people who weren't going to wait in line anyway start buying.

But Apple disappointed a huge, influential chunk of its customers today with its performance during the iPhone 3G launch, and proved it's just as fallible as any other company. That might take more than a $100 store credit to fix.

About the author

Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
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